Friday, January 23, 2009

Story on "Open source's role in the recent software layoffs"

InfoWorld's Story on "Open source's role in the recent software layoffs"

By now, news of layoffs at IBM and Microsoft have been reported far and wide. Some may take this opportunity to predict victory for open source. However, I'm hard-pressed to reach this conclusion. Indeed, as an IBM Software employee, I have a biased view. But hear me out.IBM reported a 10.5 percent year-to-year increase in 2008 Software revenue to $22.1 billion. Microsoft's Server & Tools business grew 15 percent year-to-year in Q2-FY09 to $3.74 billion. I call out the Microsoft Server & Tools business division because the majority of Microsoft's products that compete against open source (Windows Server, SQL Server, and Visual Studio) reside in the Server & Tools division. Yes, you could argue that Linux on the desktop was the driver behind the 8 percent year-to-year quarterly decline in Microsoft's Client division. But it's more likely, as InfoWorld's Tom Sullivan points out, that Vista's issues drove the decline in Microsoft's Client division business.

Nonetheless, when you look at the growth rates from IBM and Microsoft's divisions that could compete against open source, 10.5 and 15 percent are very healthy growth rates. This is doubly true when the size of the revenue (tens of billions) is taken into account. So it's difficult for me to see open source as the driver behind the layoffs.

I do, however, fear that these layoffs are a precursor to similar actions we'll see from open source companies. It's been argued that open source will do better during the belt tightening due to lower initial costs. However, what's lower than $0? I've had three discussions with friends whose companies have made the choice to go with open source solutions for projects that they've typically used commercial products. These companies have decided to save costs by asking their internal developers to shoulder the cost of supporting the open source products. So while commercial vendors were kept out of these three deals, so too were open source vendors. Clearly, three isolated examples don't make a trend. But I fear that we'll see a lot more of this in 2009.

What are you seeing out there?

p.s.: I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."